Economy

Standard DigitalWeekend Print + Standard Digitalwasnow $85 per monthBilled Quarterly at $199. Complete digital access plus the FT newspaper delivered Monday-Saturday.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print editionWeekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisGlobal news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts10 monthly gift articles to shareGlobal news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print editionEverything in PrintWeekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisPlusEverything in Premium DigitalEverything in Standard DigitalGlobal news & analysisExpert opinionSpecial featuresFirstFT newsletterVideos & PodcastsFT App on Android & iOSFT Edit app10 gift articles per monthExclusive FT analysisPremium newslettersFT Digital Edition10 additional gift articles per monthMake and share highlightsFT WorkspaceMarkets data widgetSubscription ManagerWorkflow integrationsOccasional readers go freeVolume discountFT Weekend Print deliveryPlusEverything in Standard DigitalFT Weekend Print deliveryPlusEverything in Premium Digital More

Standard DigitalWeekend Print + Standard Digitalwasnow $29 per 3 monthsThe new FT Digital Edition: today’s FT, cover to cover on any device. This subscription does not include access to ft.com or the FT App.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print editionWeekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisGlobal news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts10 monthly gift articles to shareGlobal news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print editionEverything in PrintWeekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisPlusEverything in Premium DigitalEverything in Standard DigitalGlobal news & analysisExpert opinionSpecial featuresFirstFT newsletterVideos & PodcastsFT App on Android & iOSFT Edit app10 gift articles per monthExclusive FT analysisPremium newslettersFT Digital Edition10 additional gift articles per monthMake and share highlightsFT WorkspaceMarkets data widgetSubscription ManagerWorkflow integrationsOccasional readers go freeVolume discountFT Weekend Print deliveryPlusEverything in Standard DigitalFT Weekend Print deliveryPlusEverything in Premium Digital More

However, Evercore ISI strategists believe the Fed will stop short of explicitly pre-signaling a rate reduction at that September meeting.“The Fed leadership is proceeding methodically to build the case for a cut and internal consensus as to the gameplan for subsequent moves,” they wrote.“We believe Powell will wait until Jackson Hole end August – by which time the Fed will have another month’s data – to deliver the explicit September cut signal,” strategists added.The debate leading up to the July meeting revolves around how forward-leaning the FOMC is willing to be and how firmly it supports Powell’s view that the balance of risks to inflation and employment is shifting in favor of cutting rates soon to ensure a soft landing.According to Evercore, key elements to watch for in the statement include an upgrade in the language on inflation progress, an assessment that labor data has moderated, increased emphasis on the balance of risks.Moreover, strategists said there could also be a potential change to the third paragraph of FOMC’s recent statement, which indicates that the Committee does not expect to cut rates until it has greater confidence that inflation is moving sustainably towards 2%.”We could see anything from no change to that third paragraph language – a bit hawkish though we would not overdo it – to a surprisingly explicit signal the Committee is preparing to cut at the next meeting – clearly dovish.”Economists at Citi voiced similar remarks, stating that the most likely approach for Fed officials is to use the July meeting to build consensus and signal an upcoming rate cut. Provided there is no significant upside surprise in inflation, officials are expected to deliver the nearly fully-priced 25 basis point rate cut in September.A quicker increase in the unemployment rate, for instance, reaching 4.3% or higher by August, could lead the Fed to signal continued cuts in November or even consider a 50 basis point rate cut, economists noted.”A deepening and broadening of the sell-off in equity markets could also become a significant enough tightening of financial conditions to provoke a more dovish policy path,” they said in a note.“Given upside risks to unemployment we see asymmetric risk to a more dovish policy path. In our base case the Fed cuts rates 25bp in September and then at each subsequent policy meeting until reaching a terminal rate of 3.25-3.50%.”Separately, while also expecting the first 25 basis point rate cut in September, Macquarie economists forecast a total of 75 basis points in cuts, bringing the Fed funds rate to 4.5-4.75% by early 2025. An unexpected labor market weakening could prompt a more aggressive easing cycle than anticipated, they pointed out. More

BENGALURU (Reuters) – Optimism about global growth prospects this year and next is building among hundreds of economists polled by Reuters, with risks still tilted toward higher inflation even as they cling on to their forecasts for interest rate cuts. While most major central banks were successful last year in taming sky-rocketing inflation rates with rapid rate hikes, a resilient global economy with strong employment and wage growth has kept alive risks of price pressures surging again.In all, a 56% majority of economists – 114 of 202 who responded to a question about inflation in the global poll covering nearly 50 top economies taken July 8-25 – said it was more likely to be higher than they forecast for the remainder of the year than lower. So too with rates.The global economy was forecast to grow 3.1% this year and next, an upgrade from the 2.9% and 3.0% forecast in an April poll and roughly in line with the International Monetary Fund’s latest prediction.But even with that upgrade, many central banks are still expected to cut rates at least twice by year-end.”I think the big story here is that growth globally has managed to keep grinding ahead … the global economy has managed to hang in there in the face of a lot of stresses and strains and of course the major tightening cycle of the past two years,” Douglas Porter, chief economist at BMO Capital Markets, said.”It’s still growing a little faster than 3% despite a wide variety of challenges … Our call is for growth to hang in there in the neighborhood of 3% through the second half.”That optimism stands in contrast to worries earlier this year whether the U.S. economy would be able to absorb such an aggressive season of monetary tightening without a downturn, even though concerns about the No. 2 economy, China, remain. Growth rates for 24 of the 48 top economies surveyed were upgraded from three months ago, with 13 of those from developed economies, where there had been concerns about flagging demand, and the remaining 11 in emerging ones.Eighteen economies saw a downgrade and six were left unchanged.Still, among major central banks, economists expect the Federal Reserve and the Bank of England to cut rates twice this year, and the European Central Bank three, the survey showed.Forecasters have held to a more consistent view than financial traders and investors. Aggressive market pricing for rate cuts at the start of the year retreated from six Fed cuts, down to one or two recently, and is now back to three. With growth holding up for now, inflation still will mostly dictate how low interest rates can go and when. Even now a good majority of central banks – 19 of 27 with an inflation target – were not expected to meet it by end-2024.”Risks are building … in global core goods prices, where shipping costs are nearing 2021/22 highs,” James Rossiter, head of global macro strategy at TD Securities, said.    “We don’t expect as big a boost to inflation this time around … But the threat of higher core goods inflation could reduce the offset to sticky services inflation and slow rate cuts.”Asked which component of core inflation will be the most sticky for the remainder of 2024, a majority – 56 of 104 who responded to that question – said services, followed by 30 choosing shelter and rents. The remaining 18 cited others.A 60% majority, 131 of 220, said interest rates by the end of the year were more likely to be higher than they currently forecast instead of lower.(Other stories from the Reuters global economic poll) (Polling, analysis and reporting by the Reuters Polls team in Bengaluru and bureaus in Buenos Aires, Cairo, Istanbul, Johannesburg, London, Shanghai, and Tokyo; Editing by Ross Finley and Andrew Heavens) More

In their recent note, the bank’s analysts detailed expectations for the Federal Open Market Committee (FOMC) to signal the commencement of rate cuts, starting with a 25 basis point reduction in September.”Fed officials are widely expected to hold rates steady on Wednesday at 2 PM but should send a clear signal that the first 25bp rate cut will be delivered at the next meeting in September,” Citi analysts stated.They explain that this potential rate cut is made possible by slowing inflation, which grants the Fed flexibility to reduce rates without immediate inflationary pressures.The Citi note highlights that the rising unemployment rate could further compel the Fed to act swiftly in cutting rates. “The rising unemployment rate will likely increase the sense of urgency to cut in the coming months,” the analysts noted.They predict a 75 basis point reduction this year, followed by continuous 25 basis point cuts at each subsequent meeting until the terminal rate target of 3.25-3.50% is reached in 2025.In their analysis, Citi clarifies that recent data trends support the Fed’s inclination towards rate cuts. Core PCE inflation figures have shown a deceleration, with the annualized rate falling to 2.9% in Q2. This slowdown, coupled with reduced shelter inflation, “should finally give Fed officials confidence to begin guiding toward rate cuts.”The path to achieving the terminal rate involves navigating various economic signals and policy debates among Fed officials. However, as Citi analysts conclude, “The path of least resistance is for Fed officials to use the July meeting to build consensus and signal an upcoming cut.”In summary, Citi’s forecast of a terminal federal funds rate of 3.25-3.50% by 2025 hinges on the Fed’s strategic response to inflation and unemployment trends, with initial rate cuts expected as soon as September. More

Standard DigitalWeekend Print + Standard Digitalwasnow $85 per monthBilled Quarterly at $199. Complete digital access plus the FT newspaper delivered Monday-Saturday.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print editionWeekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisGlobal news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts10 monthly gift articles to shareGlobal news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print editionEverything in PrintWeekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisPlusEverything in Premium DigitalEverything in Standard DigitalGlobal news & analysisExpert opinionSpecial featuresFirstFT newsletterVideos & PodcastsFT App on Android & iOSFT Edit app10 gift articles per monthExclusive FT analysisPremium newslettersFT Digital Edition10 additional gift articles per monthMake and share highlightsFT WorkspaceMarkets data widgetSubscription ManagerWorkflow integrationsOccasional readers go freeVolume discountFT Weekend Print deliveryPlusEverything in Standard DigitalFT Weekend Print deliveryPlusEverything in Premium Digital More

HONG KONG (Reuters) -Hong Kong property developer New World Development this month secured two onshore loans totalling 1.4 billion yuan ($193 million) as it seeks to further lower funding costs, a source with direct knowledge of the matter said. The loans, which are a 12-year 1 billion yuan loan and a 15-year 400 million yuan loan, carry an interest rate of 3.1% and 3.15% respectively, according to the person. New World declined to comment on the loan details.New World has one of the highest debt ratios in the financial city’s property sector, and its de-leveraging plan has been in the spotlight in the past year. A few of its perpetual and longer-dated bonds are still trading at distressed levels, but many have recovered from lows hit last year.Banks in Hong Kong have been cutting their loan exposure to the commercial real estate sector due to a plunge in valuations and occupancy rates, and the lending rates are also higher than onshore after a series of rate hikes. New World’s new yuan loans are pledged to the firm’s flagship K11 projects in mainland China, said the source, who declined to be named because the information is confidential.The yuan loan rates compare to the average interest rate of the company’s offshore loans at close to 6%. New World said last month it had increased the proportion of yuan loans to reduce its overall financing costs, including raising two onshore loans totalling 2.6 billion yuan in the first six months. Including the new yuan loans and other refinancing offshore, the developer has completed HK$10 billion ($1.28 billion) worth of loan arrangements and debt repayments in July, the source said, following $4.5 billion completed in the first half. New World reported earlier this year its financing costs from continuing operations rose 17% in the six months ended Dec 2023 to HK$2.5 billion due to an increase in interest rates. ‘NATURAL HEDGE’Due to higher dollar interest rates and a weaker yuan, other Hong Kong developers are also increasingly turning to other yuan-denominated channels besides bank lending, including issuing asset-backed securities and panda bonds in mainland China, as well as dim sum bonds in Hong Kong.”A natural hedge makes sense, because some developers have around 30-40% of their assets in mainland China,” said UBS analyst Mark Leung. “If they still mostly use dollar funding they’d be ‘double-hit’, which is renminbi depreciation and rising USD interest rates.” Leung expected the trend of doing more yuan fundraising would continue in the longer term as yuan is expected to be under pressure.($1 = 7.2542 Chinese yuan renminbi)($1 = 7.8084 Hong Kong dollars) More

Standard DigitalWeekend Print + Standard Digitalwasnow $85 per monthBilled Quarterly at $199. Complete digital access plus the FT newspaper delivered Monday-Saturday.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print editionWeekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisGlobal news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts10 monthly gift articles to shareGlobal news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print editionEverything in PrintWeekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisPlusEverything in Premium DigitalEverything in Standard DigitalGlobal news & analysisExpert opinionSpecial featuresFirstFT newsletterVideos & PodcastsFT App on Android & iOSFT Edit app10 gift articles per monthExclusive FT analysisPremium newslettersFT Digital Edition10 additional gift articles per monthMake and share highlightsFT WorkspaceMarkets data widgetSubscription ManagerWorkflow integrationsOccasional readers go freeVolume discountFT Weekend Print deliveryPlusEverything in Standard DigitalFT Weekend Print deliveryPlusEverything in Premium Digital More